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FTSE100 Dividend-income stocks are a great way to build wealth for the future, and after this week’s stock market plunge, many appear to be of great value.
Asset managers always struggle during a crash, so buying them involves a bit of risk. Still, I’d take a fund manager Abrdn (LSE: ABDN) today. It offers me an extremely attractive dividend income yield of 7.9%. This should help my portfolio keep pace with today’s soaring inflation rate.
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Markets around the world are reeling from the current situation in Ukraine… and with so many big companies trading at what appear to be “discounted” prices, now may be the time for savvy investors to grab some good potential business.
But whether you’re a newbie investor or a seasoned professional, deciding which stocks to add to your shopping list can be a daunting prospect in these unprecedented times.
Fortunately, The Motley Fool UK analyst team has shortlisted five companies that they believe STILL offer significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a FREE special investment report that you can download today. We think these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50s.
Hopefully I will also see more stock price growth once the markets recover, as history always shows at some point.
Abrn’s share price has been hit hard in a turbulent year for shares, falling from 248p to around 184p per share, at the time of writing, a decline of more than 25%. For some investors, this might look like a disaster. For me, it’s a chance to buy a premium dividend income share at a discount.
I would buy fund manager Abrn for its 8% yield
When a top dividend-income stock loses value, you need to investigate why. In this case, it is due to factors beyond Abrdn’s control. During a stock market crash, the good stocks fall with the bad ones. Fund managers are even less likely to escape the fallout.
Otherwise, Abrdn is doing pretty well. In March, annual revenue rose for the first time since its rocky £11bn merger with Standard Life in 2017. Adjusted operating profit for the year to December 31 rose 47% to £323m of pounds sterling. Net outflow of funds fell from £12.3 billion in 2020 to £3.2 billion. He is finally heading in the right direction.
The company’s dividend income stream is generous but only covered once by earnings. Management kept the annual payout at 14.6p per share last year, the same it paid in 2020 (it was cut from 21.6p in 2019). The board plans to hold the dividend at this level until the hedge strengthens to 1.5x. It could take a few years, but I’m not complaining, given today’s exorbitant yield.
It is one of the best dividend-income stocks in the FTSE 100
Abrn bought investment platform Interactive Investor for £1.5 billion last year, giving it access to the platform’s 400,000 retail clients. It now has a solid footing in the growing e-commerce market. Interactive Investor is an established and respected brand. The purchase also gives Abrn a reliable revenue stream through monthly subscriptions.
This FTSE100 The dividend income share has been through a tough time, but is now on firmer footing. The big threat, of course, is that stock market volatility will increase cash outflows and deter Interactive Investor clients from pumping more money into the market. It could have the opposite effect, of course. Some investors like volatility.
These short-term ups and downs don’t bother me. When I buy the best dividend-income stocks, I aim to hold them for the long term – into retirement and beyond. The current valuation of just 13.3 times earnings seems like a solid entry point to me. This near 8% return is too tempting to resist. I would buy it for the long term.